Economic Collapse

The middle class has been steadily shrinking, but most Americans still believe that they are a part of it. Perhaps this is due at least in part to the egalitarian values which have been pounded into our heads for most of our lives. Very few Americans would have the gall to define themselves as “upper class”, and I have never met anyone that would describe themselves as “lower class”. In place of “lower class”, many politicians now like to use the much more politically correct term “working class”, but a more apt description might be “the working poor”. Today, half of all American workers make less than $30,533 a year, and you certainly cannot support a middle class lifestyle for a family with children on that kind of income.

That’s according to new data from Northwestern Mutual’s 2018 Planning & Progress Study, which found that 68 percent of Americans consider themselves middle-class, down 2 percent from last year. However, because of the fuzziness of the definition, far more Americans consider themselves middle-class than technically qualify based on income.

In reality, the middle class now makes up just over 50 percent of the total U.S. population, according to a recent report from Pew Research Center, which used 2016 data. That’s compared to 61 percent in 1971.

So according to that survey, somewhere around 18 percent of all Americans wrongly believe that they belong to the middle class.

There are 325 million people living in the United States today, and so we are potentially talking about 58 million people that think that they are middle class but really aren’t.

Other surveys have come up with similar numbers. For example, one recent survey discovered that 22 percent of non-middle income Americans identified themselves as middle income…

Overall, 22 percent of the non-middle-income Americans surveyed incorrectly classified themselves as middle income. The majority of those people are actually lower-income, with approximately 19 percent of the low-income Americans surveyed defining themselves as middle income. Only approximately 2 percent of upper-income Americans mistakenly defined themselves as middle income.

Of course even if someone can be defined as “middle income” does not necessarily mean that things are going well.

Today, most Americans are living paycheck to paycheck at least part of the time. Living on the edge financially can be a constant source of stress, and it can easily start taking over your entire life. To illustrate this point, I would like to share with you a short excerpt from a recent article by Lauren Wellbank…

Like so many Americans, we struggle to get by each and every month. The compounding interest we rack up by always being a breath away from being broke plays a large role in that. We pay interest on purchases that we can’t afford to pay out of pocket in the moment (like our electric bill when my pay was short last month), and then we pay late fees when we have to take advantage of that grace period. Our monthly payments never go down because we can’t get out in front of any of it.

All of this has a psychological and emotional impact. I’m constantly running our budget through my mind, trying to reassure myself that the numbers will work out this month. I’m never not thinking about money. I dread going to the store or having to buy gas because each purchase moves us closer back down to that zero balance. The anxiety over our finances never goes away.

Have you ever been there?

Perhaps you are there right now. If so, you are definitely not alone. Most American families are deeply struggling, and it is getting worse with each passing year.

Meanwhile, the folks at the very top of the pyramid have been thriving. In fact, one study discovered that the gap between the wealthy and the poor in the United States is the largest that it has been since the 1920s.

We truly are living in a “new Gilded Age”, and the biggest winners have been those in the “top 0.1 percent”. The following comes from Matthew Stewart…

It is in fact the top 0.1 percent who have been the big winners in the growing concentration of wealth over the past half century. According to the UC Berkeley economists Emmanuel Saez and Gabriel Zucman, the 160,000 or so households in that group held 22 percent of America’s wealth in 2012, up from 10 percent in 1963. If you’re looking for the kind of money that can buy elections, you’ll find it inside the top 0.1 percent alone.

But without a doubt the numbers show that there are some tremendous disadvantages to being poor. Here is more from Stewart…

Obesity, diabetes, heart disease, kidney disease, and liver disease are all two to three times more common in individuals who have a family income of less than $35,000 than in those who have a family income greater than $100,000. Among low-educated, middle-aged whites, the death rate in the United States—alone in the developed world—increased in the first decade and a half of the 21st century. Driving the trend is the rapid growth in what the Princeton economists Anne Case and Angus Deaton call “deaths of despair”—suicides and alcohol- and drug-related deaths.

The period of relative stability that we had been enjoying is rapidly ending, and just about everyone can see that hard times are ahead of us.

A new survey of corporate CFOs was just released that contains some eye-popping numbers. It turns out that 49 percent of them believe that a recession will start by the end of next year, and a whopping 82 percent of them believe that a recession will have started by the end of 2020…

Considering that major corporations have been busy shedding workers, it follows that corporate finance leaders see a U.S. recession ahead. Evidence of a slowing economy has been popping up, including recent large-scale cuts in head count by U.S. corporations such as General Motors and Verizon.

Eighty-two percent of chief financial officers polled believe a recession will have started by the end 2020, and nearly 49 percent think the downturn will arrive sometime next year, according to the Duke University/CFO Global Business Outlook, released Wednesday.

This is yet another example of the major psychological shift that is taking place in our nation. The overwhelming consensus is that economic activity is going to slow down, and it won’t be people with millions of dollars in their bank accounts that will be suffering.

No, once again it will mostly be people that are barely getting by that will be losing their jobs and their homes, and nobody is going to come riding to their rescue.

The middle class in America has been declining for decades, and we continue to get even more evidence of the catastrophic damage that has already been done. According to the Social Security Administration, the median yearly wage in the United States is just $30,533 at this point. That means 50 percent of all American workers make at least that much per year, but that also means that 50 percent of all American workers make that much or less per year. When you divide $30,533 by 12, you get a median monthly wage of just over $2,500. But of course nobody can provide a middle class standard of living for a family of four for just $2,500 a month, and we will discuss this further below. So in most households at least two people are working, and in many cases multiple jobs are being taken on by a single individual in a desperate attempt to make ends meet. The American people are working harder than ever, and yet the middle class just continues to erode.

The deeper we dig into the numbers provided by the Social Security Administration, the more depressing they become. Here are just a few examples from their official website…

-34 percent of all American workers made less than $20,000 last year.

-48 percent of all American workers made less than $30,000 last year.

-59 percent of all American workers made less than $40,000 last year.

-68 percent of all American workers made less than $50,000 last year.

At this moment, the federal poverty level for a family of five is $29,420, and yet about half the workers in the entire country don’t even make that much on a yearly basis.

So can someone please explain to me again why people are saying that the economy is “doing well”?

Many will point to how well the stock market has been doing, but the stock market has not been an accurate barometer for the overall economy in a very, very long time.

And the stock market has already fallen nearly 1,500 points since the beginning of the month. The bull market appears to be over and the bears are licking their chops.

No matter who has been in the White House, and no matter which political party has controlled Congress, the U.S. middle class has been systematically eviscerated year after year. Many that used to be thriving may still even call themselves “middle class”, but that doesn’t make it true.

You would think that someone making “the median income” in a country as wealthy as the United States would be doing quite well. But the truth is that $2,500 a month won’t get you very far these days.

First of all, your family is going to need somewhere to live. Especially on the east and west coasts, it is really hard to find something habitable for under $1,000 a month in 2018. If you live in the middle of the country or in a rural area, housing prices are significantly cheaper. But for the vast majority of us, let’s assume a minimum of $1,000 a month for housing costs.

Secondly, you will also need to pay your utility bills and other home-related expenses. These costs include power, water, phone, television, Internet, etc. I will be extremely conservative and estimate that this total will be about $300 a month.

Thirdly, each income earner will need a vehicle in order to get to work. In this example we will assume one income earner and a car payment of just $200 a month.

So now we are already up to $1,500 a month. The money is running out fast.

Next, insurance bills will have to be paid. Health insurance premiums have gotten ridiculously expensive in recent years, and many family plans are now well over $1,000 a month. But for this example let’s assume a health insurance payment of just $450 a month and a car insurance payment of just $50 a month.

Of course your family will have to eat, and I don’t know anyone that can feed a family of four for just $500 a month, but let’s go with that number.

So now we have already spent the entire $2,500, and we don’t have a single penny left over for anything else.

But wait, we didn’t even account for taxes yet. When you deduct taxes, our fictional family of four is well into the red every month and will need plenty of government assistance.

This is life in America today, and it isn’t pretty.

In his most recent article, Charles Hugh Smith estimated that an income of at least $106,000 is required to maintain a middle class lifestyle in America today. That estimate may be a bit high, but not by too much.

Yes, there is a very limited sliver of the population that has been doing well in recent years, but most of the country continues to barely scrape by from month to month. Out in California, Silicon Valley has generated quite a few millionaires, but the state also has the highest poverty in the entire nation. For every Silicon Valley millionaire, there are thousands upon thousands of poor people living in towns such as Huron, California…

Nearly 40 percent of Huron residents — and almost half of all children — live below the poverty line, according to the U.S. Census Bureau. That’s more than double the statewide rate of 19 percent reported last month, which is the highest in the U.S. The national average is 12.3 percent.

“We’re in the Appalachians of the West,” Mayor Rey Leon said. “I don’t think enough urgency is being taken to resolve a problem that has existed for way too long.”

Multiple families and boarders pack rundown homes, only about a quarter of residents have high school diplomas and most lack adequate health care in an area plagued with diabetes and high asthma rates in one the nation’s most polluted air basins.

One recent study found that the gap between the wealthy and the poor is the largest that it has been since the 1920s, and America’s once thriving middle class is evaporating right in front of our eyes.

We could have made much different choices as a society, but we didn’t, and now we are going to have a great price to pay for our foolishness…

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Has the economic nightmare that America is now entering been completely and totally foreseeable to anyone who was willing to look at the facts objectively? Has the generation now running the United States recklessly destroyed the financial future of us all? Will future generations look back and curse those who lived at this time for saddling them with so much debt? When it comes to the financial condition of this country, most people want to make it into a Republican/Democrat thing, but the truth is that both parties have done a miserable job of managing the nation’s finances. It would have been very helpful if at least one of the political parties had been the least bit interested in getting America’s financial house in order, but that was not the case. Instead, both Republicans and Democrats worked together to pile up the biggest mountain of debt in the history of the world. They worked together to build a “global economy” that shipped a huge percentage of our manufacturing overseas. They worked together to build a system that highly favors the biggest corporations and the international banking elite. Now American stands on the precipice of a devastating economic collapse, and many of our politicians seem actually shocked about what is happening.

But they shouldn’t be. All of this has been building for a long, long time. All of this was avoidable. The fact that the economic problems of the United States have been so clearly foreseeable and yet nothing was done to stop them has a lot of people very, very upset. Among those who are extremely upset are some of our readers…..

Suetonious:

How long has this been obvious? Certainly was obvious to me even in the 80’s. The demographics just weren’t there to support my generation. But I knew implicitly that we would be the ones stuck with the bill – with the scumbags in DC turning around, right about now, to tell us with feigned shock – “Gee, there’s no money for you guys! How did that happen?”

I could lay all the blame on these criminals, and most of it DOES lay with them. However, I have also directly and constantly experienced wilful obtuseness and ignorance on the part of Americans, with their fingers in their ears and their tongues flapping about with “LaLaLaLaLa” – every time anyone tries to point out the blatantly obvious regarding the financial End Game.

Americans are about to get what they have denied as impossible because it was not pleasant. Now there’s some real good thinkin’. Hope they get a clue in a hurry. Americans may be decent people – but that don’t count for much when it’s coupled with voluntary pig-ignorance.

Steve:

So many people missing the point…

There are no GOOD jobs out there. People work for money not for jelly beans. Young people are “lazy” because they don’t want to flip burgers for minimum wage or less? Are you Kidding? What percentage of people over 35 are willing to do this? The kid that made my BigMac today looked to be all of 14 so I’m guessing not too many. It’s about the money people! The generation that came before us is the one responsible for rampant inflation, the trade deficit, and the general dismantling of a once great nation and the so called family unit. YOU have left us with NOTHING! YOU have sold our birth right to the highest bidder. YOU have made us the future slaves of Chinese overlords. YOU are the people unwilling to hire the young at a wage they can actually live on.

If you are over 50 and you are reading this have the decency to feel shame for what you’ve done to your children and grandchildren. We are certainly ashamed of YOU!

DavidB:

Wake up – it’s not bloody marxists – it’s your own financial, industrial and political leaders that have caused this mess and you all sat back and revelled in it. For years, America has lived high on the benefits of globalisation (heaps of cheap imports) while not realising that there is a price to pay. That price is the wholesale export of your manufacturing to Asia and Mexico – along with the jobs. These have largely been replaced by low wage service jobs. The only alternative in order to maintain your standard of living has been to resort to debt – hence the credit crunch. The credit crunch is only a symptom.

As a non American – I can only wonder at how you spend more than the rest of the world combined on defence while your economy and financial stability collapses around you.

Dan:

It is clear that it is a combination of many things that have brought us to this point in US. Illegal immigration, huge government intrusion, over-regulation, health care costs, frivolous litigation, etc., I can understand why companies move overseas. Ridiculous taxation, regulation, intrusion, health care mandates, loss of freedom, etc. Just some of the things contributing to US economic trouble.

Get govt. out of the way and private sector would fix most of the problem and most Americans would benefit from the fix. Those left out of the prosperity of America, usually want to be left out. There are exceptions, and injustice it out there. But it isn’t Govt. that should deal with the social ills of our world. Where is the Church?

Lunatic Fringe:

From the edge, a brief explanation…

Anyway that’s the problem. USA debt has the same problem. At 100% debt to GDP, the Fed manufactures money out of debt. The problem is supply. When the world’s greatest economy starts to crater it takes the collective action of every nation in the world to prop us up. So far, Japan, China, and Great Britain have done so. If their economies continue to deteriorate, they won’t be able to. Japan and China are in a death dance with us. To save their existing treasury investments they must continue to invest in us or lose what is on deposit. The USA has an ungodly pipeline debt of 60 trillion coming due and payable in the form of Social Security and Medicare payments. California it seems, is a petri dish, a sneak preview of our coming collapse.

That’s why expressing debt to GDP is really a pretty antiquated way of seeing the problem, although that has been a universally accepted practice. Can we survive at 125% or 150% debt to GDP? Sure. As long as the Fed isn’t audited.

If that audit ever occurs, and TRUST ME IT NEVER WILL, the world will suffer a complete and total collapse. What we don’t know, it seems, isn’t hurting us yet.

Cat Callahan:

One thing that is not allowed is for people to wipe the slate clean and begin again. The republican congress enacted DRACONIAN bankruptcy legislation so that if you declare bankruptcy, your creditors can still come after you indefinitely for collect! Check it out! My husband and I are physically disabled and my husband has a fatal illness. My parents had left a small inheritance for our medical expenses. It is now confiscated before I have even ‘inherited’ it! They want us to have a good life? Bolderdash! Or they wouldn’t allow medical bills that bankrupt the average working person./ Try finding a could where the husband works 2 jobs and the wife three, who live frugally, and still can not pay off medical bills. If I get sick again, I think I will just welcome death.

Rick:

I’m back in school myself working on an associates degree because my “hard-working” and “genius” parents knew exactly what career I was going into. Then, when that didn’t pan out and I wouldn’t continue taking their marching orders, they threw me out on the street to fend for myself. I did that successfully for three years and put up with all their bitching and abuse about not working “hard enough” or “expecting other people to take care of me.”

Fortunately, I discovered that I have a great aunt and uncle who have been letting me live with them and go back to school. I’ve got a decent part time job at the school, but I am barely making enough money to pay rent to them. My advice is don’t give up and don’t be afraid to ask for help from family and friends. I would probably be living in a card board box if not for my aunt and uncle helping me.

For all those people saying why can’t you get 3 or 4 jobs to support yourself, I hate to break it to you, but employers are not going to hire someone who is working at another place and plan their schedule around them. They are only going to hire employees that are available 24/7 and not have to pay them above minimum wage.

This is the major crisis of our times right now. Instead of blaming and bickering, let’s do what we can to help everyone out.

How do you save a city that is dramatically declining like Detroit? Well, for the mayor of Detroit the answer is simple – you bulldoze one-fourth of the city. Faced with a 300 million dollar budget deficit and a rapidly dwindling tax base, Detroit finds itself having to make some really hard choices. During the glory days of the 1950s, Detroit was a booming metropolis of approximately 2 million people, but now young people have left in droves and the current population is less than a million. The true unemployment rate for those still living in Detroit is estimated to be somewhere around 45 to 50 percent, and poverty and desperation have become entrenched everywhere. In many areas of the city, only one or two houses remain occupied an an entire city block. In fact, some areas of Detroit have so many vacant, burned-out homes that they literally look like war zones. And yes, it is true that there are actually some houses in Detroit that you can actually buy for just one dollar. According to one recent estimate, Detroit has 33,500 empty houses and 91,000 vacant residential lots. So what can be done when an entire city experiences economic collapse?

Well, Detroit Mayor Dave Bing believes that the answer is to downsize on a massive scale. Bing believes that Detroit simply cannot continue to pay for police patrols, fire protection and other essential services for areas that resemble ghost towns.

So his plan is to bulldoze approximately 10,000 houses and empty buildings over the next 3 years and direct new investment into stronger neighborhoods. In the areas that the city plans to bulldoze, the residents would be offered the opportunity to relocate to a better area. For buildings that have already been abandoned, the city could simply use tax foreclosure proceedings to reclaim them. Of course if there were some residents that did not want to move, eminent domain could be used to force them out.

So which areas would be bulldozed and which areas would be left standing?

Nobody knows yet, and those decisions could make a lot of people angry.

Also, the city of Detroit simply does not have the money to purchase land and relocate residents without federal assistance.

So there are problems.

But other smaller cities are already doing this kind of thing on a smaller scale.

Flint, Michigan has already torn down approximately 1,100 houses mostly in outlying areas. The program in Flint was actually the brainchild of Dan Kildee, treasurer of Genesee County, which includes the city of Flint.

In Flint, no residents are forced out of their homes unwillingly. Instead, the city has been buying up houses in more affluent areas of Flint to offer to those in areas that the city wishes to bulldoze.

And there are a whole lot of U.S. cities that are in a serious state of decline – mostly in what is known as “the Rust Belt” of America. Because of reckless U.S. trade policies, the once great U.S. manufacturing base centered in the Rust Belt has been dismantled and those jobs simply are never going to come back.

So now cities like Detroit and Flint are faced with either dealing with the economics of decline or going bankrupt for good.

But the truth is that Detroit and Flint are just on the cutting edge of what is happening to America as a whole.

The U.S. is experiencing a very painful economic decline, and what is happening in Detroit and Flint could happen in your city very soon.

Is the world about to experience an absolutely crippling economic collapse? That is the conclusion that we have come to after years of research. The truth is that the world economic system is essentially a mountain of debt based on paper money that is backed up by nothing. History has shown that any economy based on debt and paper money will always fall apart in the end – especially when greed and corruption are huge factors in the equation as they are today.

In particular, the United States finds itself in a massive economic mess. It was once the greatest creditor nation on earth, but now it is the biggest debtor in the history of the world. It blows the mind to think that the “richest nation in the world” has become the nation with the most debt in the history of the planet in just one short generation.

But rather than learning the lessons of the past, this current administration is making the long-term economic problems far worse by spending American taxpayer dollars as if they were monopoly money. In an effort to “stimulate the economy” and “bail out” troubled financial institutions, the current administration has put future generations in so much debt that it is basically mathematically impossible for them to ever get out of it.

Not that U.S. corporations and financial institutions are doing any better. They have created a financial black hole known as “derivatives” that threatens to destroy the entire financial system at any moment. Most large U.S. corporations are either so highly leveraged or have so much exposure to derivatives (or both) that even a slight shift in the economic winds can capsize many of them.

Of course we all know about how much of a mess American consumers find themselves in. Credit card debt has absolutely exploded this decade and the majority of Americans now find themselves living month to month. Personal bankruptcies and mortgage defaults continue to set all-time record after all-time record. Millions of Americans are losing their jobs and millions of Americans are losing their homes as the economy continues to implode.

So is there hope for the future?

No.

The U.S. government continues to go into debt so fast that it is absolutely mind blowing. Pension funds from coast to coast are broke. Banks are failing at a frightening rate. Millions of good jobs have been shipped overseas for decades and they simply are not coming back. Without good jobs, the American middle class cannot support the bizarre debt spiral that has kept the U.S. economy going for so long.

What is ultimately going to happen is that the financial authorities will flood the money supply with tons of cash in an effort to “print” our way out of the economic crisis. But all that will do is cause hyperinflation and will absolutely destroy the value of the dollar. All of the accumulated wealth of the American people will disintegrate before their eyes as their dollars quickly become worthless.

So, no, the future is not pretty.

And that is what we will be documenting on this website.

A global economic collapse is coming and it is going to rip the world apart.